depth. For example, Dr. Fuller’s book Grunch of Giants might be a good book to read.
Simplicity is important because there are many people who profit from the subject of money being kept complex and confusing. It’s easier to take your money if you’re confused.
So I ask again, “Is the love of money the root of all evil?” I say no. I believe it is more evil to keep people in the dark, ignorant about the subject of money. Evil occurs when people are ignorant of how money works, and financial ignorance is an essential component of the conspiracy of the rich.
Reader Comments
I went to Wharton and am embarrassed to say that nothing in my course of study explained wealth creation this clearly. Everyone should read this book (and all of Robert’s books) starting in high school.
—Rromatowski
Robert—I would say yes, the love of money is the root of all evil, for the same reason you say no. The evil of keeping the masses in ignorance about money is just a “derivative” of the evil love of money.
—Istarcher
Timeline of a Crisis
In August 2007, panic silently spread throughout the world. The banking system was seizing up. This set in motion a domino effect that threatens even now to bring down the entire world economy. In spite of massive government bailouts and stimulus packages estimated to be over $7 trillion to $9 trillion worldwide, some of the world’s biggest banking and business institutions, such as Citigroup and General Motors, continue to wobble. Their long-term survival is in question.
The crisis threatens not only major corporations and multinational banking conglomerates, but also the security of hardworking families. Today, millions of people who thought they were doing the right thing by following the conventional wisdom of going to school, getting a job, buying a home, saving money, staying free of debt, and investing in a diversified portfolio of stocks, bonds, and mutual funds are in financial trouble.
In talking with people around the country, I find that they are concerned and scared, and a number of people are suffering personal depressions after losing their jobs, homes, savings, kids’ college savings, and retirement funds. Many don’t understand what is happening to our economy or how it will eventually affect them. Many wonder what caused this crisis, asking, “Is anyone to blame? Who can solve the problem? And when will the crisis end?” With that in mind, I think it’s important to spend a moment reviewing the events leading up to our current crisis. The following is a brief and by no means comprehensive timeline highlighting some of the major global economic events that have led us to the precarious financial state we find ourselves in today.
August 6, 2007
American Home Mortgage, one of America’s largest mortgage providers, filed for bankruptcy.
August 9, 2007
French bank BNP Paribas, because of problems with U.S. subprime mortgages, announced it couldn’t value assets worth over 1.6 billion euros.
As global credit markets locked up, the European Central Bank injected nearly 95 billion euros into the Eurozone banking system in an effort to stimulate lending and liquidity.
August 10, 2007
A day later, the European Central Bank pumped another 61 billion euros into global capital markets.
August 13, 2007
The European Central Bank released another 47.6 billion euros, the third cash infusion totaling almost 204 billion euros in a span of three working days.
September 2007
Northern Rock, the largest mortgage broker and a large consumer bank in Britain, experienced a run on the bank by depositors. It was the first bank run in over 100 years.
The Presidental Campaign Heats Up
As the financial crisis spread around the world in 2007, the U.S. presidential campaign—which was to be the longest and most expensive political campaign in history—picked up steam.
During the early part of the campaign, even though there were clear signs that the world economy was on the verge of collapsing, the major presidential candidates rarely mentioned the economy as an issue. Rather, the hot campaign topics were the war in Iraq, gay marriage, abortion, and immigration. When the candidates did discuss the economy, they did so dismissively. (This was never more apparent than when presidential candidate John McCain later famously remarked in late 2008, “The fundamentals of our economy are strong,” as the Dow dropped a record 504 points that day.)
In the face of all the evidence of a mounting major financial crisis, where was our president? Where were our leading presidential candidates and financial leaders? Why were the media darlings of the financial world not warning investors to get out? Why were financial experts still encouraging investors to “invest for the long term”? Why were our political and financial leaders not sounding the warning call about this financial storm? Why didn’t they at least have the wisdom to stand up and say, “It’s the economy, stupid”? To quote a famous song, they were “blinded by the light.” On the surface, everything seemed fine, as evidenced by the next event in our timeline…
October 9, 2007
The Dow Jones Industrial Average closed at a historic high of 14,164.
A Year Later
September 2008
President George W. Bush and the U.S. Treasury asked for $700 billion in bailout money to save the economy, over a year after the European Central Bank had already infused 204 billion euros into the economy in August 2007 and almost a year after the Dow hit its all-time high.
Toxic financial derivatives resulted in the collapse of Bear Stearns and Lehman Brothers and the nationalization of Fannie Mae, Freddie Mac, and one of the world’s largest insurers, AIG.
Additionally, the U.S. auto industry revealed that it was ailing, and GM, Ford, and Chrysler asked for bailout money. Many states and city governments were also now asking for bailout money.
September 29, 2008
On a black Monday, after President Bush asked for bailout money, the Dow plunged 777 points. It was the biggest single-day point-based drop in history, and the Dow closed at 10,365.
October 1, 2008, through October 10, 2008
In one of its worst spans ever recorded, the Dow dropped 2,380 points in a little over a week.
October 13, 2008
The Dow began to exhibit
